Dr. Manmohan Singh will be well advised to get his mind off the minutiae of electoral politics this week. Bigger things are at stake in London next Thursday. The G20 meeting which Gordon Brown has convened is reminiscent of a similar London Conference in 1933. That one failed because Franklin Roosevelt refused to come. USA was then the greatest economic power but lacked the political clout in international financial matters that Britain had. The failure of developed countries to cooperate in tackling the Depression added to national grievances hanging over since the Treaty of Versailles sparked the Second World War.

Since then international cooperation and dialogue have been institutionalised. The Bretton Woods conference established the IMF and the World Bank. These became possible because Britain, with Keynes at the head of its delegation, recognised that while it had lost economic power it still had the best brains. Keynes did not get his way but still the Bretton Woods kept the Western economies prosperous for 25 years.

Since the breakdown of fixed exchange rates in 1971, we have had a dysfunctional IMF and no oversight of global financial problems. The developing countries got nothing but bad advice and a lot of bullying from the IMF. Now we have had globalisation. The flow of private capital to developing nations rose from $200 billion in 1992 to $950 billion in 2007, many times the official foreign aid. After 15 years of boom, from 1992 to 2007, we have a deep depression. The flow of private capital to developing nations is again down to $200 billion. The system needs fixing, perhaps with a reformed and restructured IMF.

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